The Supreme Court has stayed an order by the National Company Law Appellate Tribunal (NCLAT) which allowed partial sale Reliance Communications’ assets to Reliance Jio. The stay will remain until the NCLAT gives its final decision on the matter. The judgment comes after HSBC Daisy Investments (Mauritius) Ltd approached the Supreme Court, challenging the tribunal’s April 6 order which had cleared the RCom-Jio deal.
SC’s judgment will put a pause on the deal between the two companies which was pegged at Rs 25,000 crore. The tribunal is set to hear the case on April 18 about the sale, where the NCLAT could ask for giving part of the sale proceeds to minority shareholders who claim an interest of nearly 4% in the company.
At the same time, RCom has said that there is no legal restriction on it against sale of its spectrum, MCNs and real estate, and the company is duly proceeding with the same. A company representative said that the claim of minority investors in the tower and fibre proceeds can at best be Rs. 200 – 300 crore. So, the company remains confident of completing the asset monetisation within the next few weeks.
RCom in trouble
The RCom-Jio deal, which would bail out the heavily indebted RCom, was announced in January. It will involve the take over of towers, optic fibre cable network, spectrum, and media convergence nodes.
However, it could not be executed as companies continued to challenge it. In March, an arbitration court stayed sale of RCom’s wireless assets after Swedish company Ericsson took the legal route to recover its dues. On April 5, however, the Supreme Court lifted the stay directing that secured lenders can proceed with the asset sales in accordance with law. The awaited April 18 order will give the final verdict on the deal.
Rcom recorded major losses in previous quarters, but its planned exit from consumer business, which comprised of wireless, direct to home and PCO, helped cut its losses up to 95% in the quarter ended December 30, 2017.
The company has discontinued its GSM services in eight service areas and CDMA in nine service areas. The company is now allowing customers to generate unique porting codes port out codes on its website, after the Telecom Regulatory Authority of India extended the deadline for porting out of the network to March 20, 2018.